When a financial intermediary collects together deposits and lends them out as loans to companies,it is engaging in:
A) liability management.
B) liquidity management.
C) credit transformation.
D) asset transformation.

Question

Quizplus · Accepted Answer

Asset transformation involves taking the funds received as deposits and using them to make loans, such as lending to organizations. This is the primary activity of financial intermediaries in the credit market.

When a Financial Intermediary Collects Together Deposits and Lends Them